Marshalls rethinks strategy as profits dip

In the half-year to 30 June 2023, the Elland-based building products group reported a statutory pre-tax profit figure of £16.7m, a 30% year-on-year decline.

In describing conditions during 2023 so far as “challenging”, Marshalls said that “a weak macro-economic backdrop has impacted the Group’s key end markets, resulting in a reduction in sales volumes, revenues, and profitability.

“In response, management has taken decisive action to improve agility, reduce capacity, take cost out of the business, and manage cash. These actions have resulted in a leaner business that is well positioned for when its end markets improve.”

Marshalls, which operates in three divisions – landscape products, building products and roofing products – disposed of its interests in Belgium this April to concentrate on the domestic market, but has continued to struggle in a moribund housing market.

Earlier this summer, it took the decision to close its facility in Carluke, Scotland. Over the six-month reporting period, net debt was reduced by 9% to £230m.

Marshalls said that the adjusted pre-tax profit figures for the period, to account for adding back adjusting items, stood at £33.2m PTP. Group revenue for the period was £354.1m, up from £348.4m in 2022.

Chief executive Martyn Coffey said: “Market conditions in new housebuilding and private housing RMI (renovation, maintenance and improvement) were challenging in the first half of the year, which led to a material reduction in volumes across all three of our reporting segments.

“This resulted in a significant decline in Group profitability compared to the first half of 2022. We have responded by taking action to improve our agility, reduce capacity, take cost out of the business, and manage cash.

“Regrettably, these actions necessitated in a reduction of approximately 250 roles across the organisation. However, we have been careful to ensure that we have sufficient latent manufacturing capacity that will allow us to respond quickly when there is an improvement in market conditions.

“Our refreshed strategy is underpinned by our strong market positions, established brands and focused investment plans to drive ongoing operational improvement. Notwithstanding short-term challenges, the Board remains confident that the long-term market growth drivers and a focus on executing key strategic initiatives, will underpin a material improvement in profitability when market conditions normalise.”